As an industry that bounced back relatively quickly after the initial shock of the COVID-19 pandemic, agriculture in Michigan and across the U.S. faces key issues that will shape its fate in 2021, experts say.
While the pandemic fallout certainly leaves farmers, food processors and retailers with plenty to contend with, the uncertainty will no longer rattle the industry as it focuses on its more inherent needs and deficiencies involving federal trade policy, labor availability and adapting to shifting consumer behavior.
“COVID is obviously a big deal, but had we been talking 10 months ago or nine months ago, there was so much uncertainty on what COVID looked like,” said Trey Malone, assistant professor for the Department of Agricultural, Food, and Resource Economics at Michigan State University.
“I’m not saying we figured out how to do it, but at least we know what to expect better,” he added. “The thing about markets is that, what drives changes in markets is uncertainty, and trade is a big piece right now.”
New year, new leadership
Like virtually any other instance of sweeping leadership change, the U.S. agriculture industry is bracing for potential changes under President-elect Joe Biden and his candidate for agriculture secretary, Tom Vilsack, who served in the same role under President Obama.
With Democrats set to control the executive and legislative branches of the federal government, Vilsack’s appointment would signal that policy pertinent to agriculture and rural economies will still likely not shift too far left.
“It’s literally the same guy that was under (Barack) Obama,” Malone said. “I would anticipate that, obviously public policy is going to change, but it’s not going to be a terrifying change.”
“The Biden administration has made it pretty clear that COVID is kind of the top priority,” Malone added. “Because of the changes in trade that have happened over the last four years, that’s a big hole that is probably just going to stay there for a little bit. That’s a big deal.”
Michigan Farm Bureau President Carl Bednarski told MiBiz that Vilsack’s previous experience in the role will allow him to hit the ground running when the new administration takes over this week, ensuring that farmers continue to receive the assistance and expertise that they rely on.
The Farm Bureau is a founding member of the Food and Agriculture Climate Alliance, a partnership between farming, forestry and environmental groups that has been at the negotiating table to promote policy changes.
Public policy throughout the pandemic has benefited the agriculture industry, particularly both phases of the Coronavirus Food Assistance Program, which provided both producers and consumers with assistance.
The Farmers to Families food box program also saw the formation of 127 million boxes of fruit, vegetable, dairy and meat products packaged and distributed to food banks and other organizations. The USDA’s Agricultural Marketing Service partnered with national, regional and local distributors to purchase up to $4.5 billion in fresh produce, dairy and meat products from American producers of all sizes.
Still, farmers are itching to look to the market for their income, which shines a light on the current state of trade.
The United States-Mexico-Canada Agreement (USMCA) and China trade agreements taking full effect in 2021 will bolster trade, experts say. However, worldwide recovery from COVID will also have a say in the matter.
U.S. agricultural exports to China, in particular, have been accelerating each month, with a record $17.5 billion in sales reported in October 2020 alone. The commodity markets have responded favorably as a result, setting the stage for better prices and profits in 2021.
“It’s essential that the next administration follow through on enforcing both major trade agreements to all U.S. farmers to rely on the market instead of ad hoc federal disaster programs for their farm income,” Bednarski said. “Any trade disruptions will quickly and negatively impact the commodity markets and farm economy.”
The long lingering agriculture workforce shortage has only worsened as a result of both recent public policy and COVID-19.
Travel restrictions and immigration policy leaves the industry hungry for a viable guest worker visa program that will drive more work to food producers.
“Absent legitimate immigration reform, we continue to encourage streamlining the H2A Seasonal Guestworker program, using online digital forms and processing, to shorten the current six- to eight-month lead time required to secure those guest workers,” Bednarski said.
This will be an initiative that the Michigan Farm Bureau looks to sink its teeth into this year.
“Michigan Farm Bureau is working on a series of labor education meetings for our members in early 2021,” Bednarski said. “Labor availability and the regulatory burden that surrounds the labor issue has been identified as a major concern for the agriculture industry.”
Malone said that, despite the Trump administration’s focus on foreign immigration, they mainly left agriculture policy alone. But it’s not an issue that will go away any time soon.
“Since I’ve been alive, people have been talking about labor shortages in agriculture,” Malone said. “I think that’s not going to go away. I think there is some promise for the industry that we’ll actually see a little bit more of a codified approach to ag policy.”
Shift in consumer demand
Another industry-defining byproduct of the pandemic has been the changing of value chains. The pandemic has driven more people to eat at home as opposed to restaurants. Producers, processors and packagers have had to adjust accordingly.
In its recently released report, “2021 The Year Ahead: Forces That Will Shape the U.S. Rural Economy,” CoBank — which provides loans and financial services to cooperatives, agribusinesses and rural public utilities — crowned producers and processors with retail grocery contracts as winners in the pandemic. The uptick in quick-service restaurant demand also benefited some producers.
With restaurants across Michigan and the U.S. facing an uncertain future, that shift in supply chain should likely stick around for 2021.
“As thousands more full-service, sit-down restaurants are expected to close in the first winter months of 2021, supply chains will be transitioning to serve rising consumer demand for home meals,” according to the CoBank report. “While the deployment of a COVID-19 vaccine across the U.S. population will underpin a recovery in the food service sector, widespread economic benefits are not expected until the second half of 2021.”
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